Standard Cost System-Materials and Labor Variances
the Hemlock Corporation Produces

question 95

Essay

Standard cost system-materials and labor variances
The Hemlock Corporation produces a single product. The company has developed the following standards for labor and materials:
During the past month, the company purchased 3,500 pounds of direct materials at a total cost of $4,550. All of this material was used in the production of 1,300 units of output. Direct labor cost totaled $40,300 for the month. The following variances have been computed:
Compute the following. If the result is a variance indicate whether it is favorable or unfavorable.
(a) The standard price of materials. _________________.
(b) The standard quantity of materials allowed per unit of output _________.
(c) The actual direct labor cost per hour for the month. _____________.
(d) The labor rate variance. ______________________.
$\begin{array}{l|l|l|}\hline &\text { Direct } & \text { Direct } \\\hline &\text { Materials } & \text { Labor } \\\hline \text { Standard quantity or hours per unit } & \text { ? pounds per unit } & 2.0 \text { hours per unit } \\\hline \text { Standard price or rate } & \text { ? per pound } & \$ 15 \text { per hour } \\\hline \text { Standard cost per unit } & ? & \$ 30.00\\\hline\end{array}$ $$\begin{array} { | l | l | } \hline \text { Materials quantity variance } & \$ 670 \text { unfavorable } \\\hline \text { Total materials variance } & \$ 325 \text { favorable } \\\hline \text { Labor efficiency variance } & \$ 3,475 \text { favorable } \\\hline\end{array}$$

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Definitions:

Low Validity

When the effectiveness of a test, assessment, or measurement in accurately reflecting what it claims to measure is questioned or minimal.

Low Reliability

a measure indicating inconsistency in the results of a test, assessment, or measuring tool over time or across different raters.

Early Childhood Experiences

Influential events and interactions during the early years of life that significantly shape an individual's development and personality.

Optimistic Thinking

A mindset characterized by a positive outlook on life, expecting good things to happen or situations to turn out well.